One headline this week read, Procter & Gamble would lay off 1,600 after discovering that advertising on Facebook is free. But how many of your 2000 fans bother to take part in the conversation? Less than half a percent. Learn from Red Bull, Coca-Cola and Nike! Or maybe NOT.

I just got back from another convention where an ad agency tried to convince the audience that Facebook was a fantastic way to improve your bottom line. Are you sceptical? So am I.

We can probably agree that if a company wants to use social media effectively, it must evaluate its current position with the help of a social media audit (Gattiker, 2012 – coming soon). Moreover, if you run a huge marketing campaign that implies customers are cool and have exciting lives, nobody cares about the brand, as evidenced by this Red Bull branding video.

In the Mercedes-Benz video below, people call for a cab and get picked up by a trailer truck. If you can afford the €200,000 to hire VonMatt to script the story and make the video, you might get 8000 views for the English version and 20,000 for the German one. The question is whether this is a flop. Measure for impact, anyone?

Research, based on 400 million Facebook fans, indicates that only 3.5 to 7.49 percent see your status update (Parker, Brian, June 21, 2011). Also, just 0.25 to 0.90 percent interact with the status update.

To put this in email campaign terms, only 3 to 7 percent open it. Moreover, less than one percent click-through on one of the links you provide in your email newsletter. That sounds like a nightmare for any marketer.

Does this suggest that we are producing content that represents added value for the client?

A trip down memory lane…

Remember our ComMetrics 900-98-1.5-0.5 rule from 2010? It states that 900 out of every 1000 people do not even see your status update or tweet. Only 0.05 percent (1 person per 2,000 readers) engage by joining the conversation with a comment on your blog or Facebook page.

2. Facebook engagement drops to 0.45 percent

Just to wrap things up, let me ask you: how many fans actually bother to have a conversation with brands on Facebook? One metric we can look at is People Talking About This, the awkwardly-named running count of:

– likes,
– posts,
– comments,
– tags,
– shares and
– other ways a user of the social network can interact with branded pages.

A recent study used this metric as a proportion of overall fan growth of the top 200 brands on Facebook over a six-week period in October 2011.

Data revealed that the proportion of overall fans who were People Talking About This was 1.3 percent. But it gets worse: if one subtracts new likes, which only require a click (somewhat akin to TV ratings) and focuses on the forms that suggest greater interaction, one is left with only 0.45 percent.

Accordingly, less than half a percent of Facebook fans that identify themselves as ‘liking’ a brand actually bother to create any content with regard to it.

No one got anything else besides a short press release, but unless you can read a study about Facebook, Twitter or social media usage in full, how can you trust it? I explain this challenge for anyone who dislikes statistics here:

Bottom line – take-aways

We should conclude by listing three take-aways that this material provides. A company like Red Bull does not acquire 26 million fans without any engagement. However, 0.5 percent means only 13,000 actively engage and produce content from Red Bull’s offerings (okay, maybe 1.5 percent because it is cool, but that’s still less than 500,000 people). Do you really want to know how many full-time equivalent (FTE) personnel were required to create all this buzz?

Brand growth requires reaching medium and light buyers. Facebook fans tend to be heavy buyers. While Facebook is a useful channel to reach them, it might not be the right place to engage potential and light or medium buyers.

Searching for a Facebook audience may be futile. The research presented here shows that Facebook status updates are more like broadcasting news to an empty stadium. People want a freebie or to participate in a sweepstakes. But will they buy more product from you because they are a fan? No, your favorite butter need not apply.

Engage with clients on your webpage or blog. If Unilever’s Magnum ice cream, Coca-Cola or Gillette find Facebook a great platform, good for them and even better for Facebook’s early-stage investors.Facebook is the icing on the cake! Nonetheless, provide content that your target audience wants (the cake) on your homepage/blog.
There are too many examples where companies have wasted resources on Facebook by ignoring the basics any good marketing strategy must encompass (e.g., Swiss Post Office).

PLUS, why would anybody spend money to attract Facebook fans? Fans are not known to purchase more product after clicking the Like button!

By the way, when it comes to the Facebook IPO, investors may be paying for the world’s most over-priced photo-sharing, gaming and social networking site. What they do pay for is something old-fashioned: reach (or just eyeballs – many of them).

@twitter-161315135:disqus I thank you for that comment. Yes I agree plenty of information and as usual you make an important point. Red Bull already has an identity and a soul true BUT using a lot of money. I always wonder if it also works with:

1 – less money, and
2 – not encouraging younger people do imitate these absolutely idiotic snowboarding stunts that are shown in their movie (see above) – unnecessarily endangering your life to get an adrenaline kick (what about ethics and corporate responsibility?

What you think?
PS. what does CI-Hausaufgaben stand for? Roland, can you spell it out please?

@twitter-161315135:disqus I thank you for that comment. Yes I agree plenty of information and as usual you make an important point. Red Bull already has an identity and a soul true BUT using a lot of money. I always wonder if it also works with:

1 – less money, and
2 – not encouraging younger people do imitate these absolutely idiotic snowboarding stunts that are shown in their movie (see above) – unnecessarily endangering your life to get an adrenaline kick (what about ethics and corporate responsibility?

What you think?
PS. what does CI-Hausaufgaben stand for? Roland, can you spell it out please?

Fascinating post Urs. I wonder what the correlation is between social media and online communities like Ning, Plaxo, Xing, etc. I am curious to know if engagement in these online communities has similar stats in terms of sharing, participation on Facebook.

I personally know several people who are wildly successful business-wise with Facebook. But then they approach it like they would their large circle of friends — lots of good posts, comments, etc. but very personal. You know you are talking to a real person and not some ‘brand.’

So I wonder if scale is also an issue — i.e. the bigger the company, the less the return because of the lack of an identifiable person.

@google-404476dcdb34523b292000898f0986c1:disqus thanks so much for leaving this post.
I cannot say much about Ning, although it is quite similar to Xing or LinkedIn in that we can discuss issues in groups. But In many cases, people broadcast and do not want to reply, do they. Some bloggers do not reply or reply very late.
In discussion groups, even on Monster or LinkedIn quite often people’s posts do not get replied to as shown here:

I think also you are making a very important point, being personable. Wildly successful on Facebook as a person is possible but depends upon what you sell. Maybe ‘live happy’ seminars will sell but not B2B. Nevertheless, the larger the operation the less personal it might be and that reduces its attractiveness for many except getting a discount coupon maybe.

I wish we had numbers from LinkedIn or Xing but I am not aware of any at this stage and it might be hard to measure unless we define first what we are trying to measure.

@kdietz:twitter Thanks for sharing your insights, as usual very helpful.

Dear @88770fc4794d22757e6e295d68ce8648:disqus Thank you so much for finding this error. I corrected it to 130,000 and also corrected the other number to < 500,000 – no idea how this happened. I am grateful. Merci.

The campaign revolved around a Facebook page titled “Mean Stinks,” an anti-bullying effort. Facebook kind of attributes the 9 percent sales gain to P&G’s advertising efforts on its platform.

Although it then tones it down to claim it increased engagement. Here is the quote out of this document.

“Procter & Gamble chose to advertise on Facebook to generate awareness for Secret deodorants “Mean Stinks” program and selected a female audience likely to be receptive to the campaign. The ad featured a confessional-style video of a girl admitting that she had bullied others, realizing the damage she had caused, and apologizing. In the 26 weeks after the Mean Stinks campaign launched, Secret experienced a 9% increase in U.S. sales and an increase in engagement with its Facebook Page.”

The question remains, what was due to the discount coupons, TV and print advertising versus Facebook. Did the increased engagement get Facebook fans to purchase the product that they otherwise would not have bought? Nobody knows this for certain.

Sebastian, what is your opinion about this.

Denise Heusser

I like a lot of brands (and groups on Xing), and maybe there are e few I really interact with. Sometimes I just read the post or watch the video and like it. That doesn’t mean I click “I like” or share it with my friends. Could it be that the click-/like-/share-rate is a bit overestimated? Just a question.

You pose a very interesting question. Maybe it is overestimated the click/like/share-rate. However, it is for that reason why some people remove the Like counts from the statistics to arrive at the ‘active engagement’ kind of ratio. The latter shows what we really do with the content.
I think it is a bit similar to people tweeting about a story versus writing a comment like you did here. Tweeting about this Facebook post is nice, writing a comment is much more interesting for everybody (learn from comments, etc.). Of course, it takes effort. We discuss this a bit here.

@twitter-26943860:disqus Thanks so much for your thoughtful comment here.
Yes I agree that we need to look at the trends regarding these values and so forth.

However, since LIKE’s do not increase my sales (at least according to the research mentioned in the blog post) why bother with ads?

More Infos I find Interesting
Facebook is still in the early stages of turning its huge audience into a revenue generating destination. Based on the figures disclosed on 2011-02-01, it generated about :
– $5.10 in revenue from each of its active monthly users last year, based on an average of 725m throughout the year (3’697’500’000 or $3.7 bn rev.).

By comparison, Google generated more than $27 in net revenues for each of the more than 1bn active users across all of its services last year.

PS. The Facebook number is in line with other recent internet IPOs, such as:
– Zynga (social game company) is estimated to have produced $5 in revenue for each of its 227m active users in 2011,
– LinkedIn (the professional social network), earned nearly $6 for each of its 88m unique monthly visitors.

The stat you mention in the article “only 3.5 to 7.49 percent see your status update” was from June 2011, and since then Facebook has implemented the Ticker, the new “Talking About This” number, and People Reached, which is the new standard for posts, not Impressions. From what I have seen written on it recently, the actual percentage of fans that see your status update is more like 17%.
===>http://www.allfacebook.com/facebook-page-17-2012-01

@lisajlukowski:disqus Thanks so much for providing this interesting link.
The link provides information however, that says 0.4 percent impressions (see lower graphic). That is more similar to what I reported above.

The 17% is interesting but it is a number that does not guarantee you that people

a – see it, and, most important
b – actively do something (i.e. more than just clicking the Like button)

Then your statistics are very similar than my 0.5 or thereabouts…. 0.4

To be honest, I’ve always just assumed that everyone realised this – being a Facebook user myself (and assuming that most other people are, too)

I’ve *never* Liked a brand or company page, let alone interacted with one or bought something from them (I do have many music, movie, book and TV likes, but I usually unsubscribe from their feeds unless I really want news about tour dates or a new TV season…).

However it seems that alot of people never realised this, so kudos to you for helping to point it out to people!

Dear @jiminyjohnson:disqus
Thanks for your comment. I like your statement that you never liked a brand…. but you are probably in the minority. Nevertheless, even if they like a brand, they rarely if ever get engaged with the butter, Starbucks or what have you. We agree on that one for sure

It is like most people believe that a video that goes viral will sell cakes. No it means eyeballs all right but that your cash register rings…. not necessarily:

Dear @twitter-12613752:disqus you and @google-1ac3f858a5bd3ca30bba89bf4d1d3f86:disqus (see above) both raise important issues about if the click-lie-/share-rate or ratio being a bit overestimated and that the like button is not a true engagement measure. But now Facebook has released information that question the company’s ethics.

Sheryl Sandberg – Facebook’s COO – acknowledged that on average the reach of status updates is only 16%. Accordingly she claims 16 out of 100 fans see your status updates.
This number is way higher than what we share with you above based on research and far lower than what you get for an e-mail newsletter (around 20 percent or more).So you get 30 to 50 percent less visibility through Facebook than through e-mail.

Who writes here?

With two decades of application inside blue chips and FT Global 500s, his pioneering work in the field of corporate blog benchmarking and the social media audit (see his books) are now a recognized gold standard.

He is known for a high energy style that combines humor, street smarts, and board room wisdom.
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